Exhibit 10.03
AMENDED AND
RESTATED
EMPLOYEE BENEFITS TRANSITION
AGREEMENT
This Amended and Restated Employee
Benefits Transition Agreement (“Agreement”) is entered
into by and between Valero Energy Corporation (“VEC”),
Valero GP Holdings, LLC (“Holdings”) and Valero GP, LLC
(“GP”) to be effective as of December 22,
2006.
WHEREAS, GP is a wholly owned
subsidiary of Holdings and, prior to the transactions referenced
herein, Holdings has been an indirect wholly owned subsidiary of
VEC; and
WHEREAS, pursuant to a series of
public offerings, VEC has sold its ownership interest in Holdings
to public unitholders; and
WHEREAS, the first such public
offering (“Initial Tranche”) became effective on July
19, 2006, at which time Holdings and (as a result of
Holdings’ ownership, GP) ceased to be within the controlled
group of VEC, as contemplated under Internal Revenue Code section
414(b); and
WHEREAS, VEC, Holdings and GP have
made certain provisions for, and certain agreements with respect
to, the transition of employee benefit plans covering employees of
GP in connection with such transactions; and
WHEREAS, VEC, Holdings and GP have
agreed that VEC and certain of its wholly owned subsidiaries (the
“VEC Subsidiaries”) will transfer to Holdings related
liabilities and assets, such transfer to relate to whichever entity
holds such liability; and
WHEREAS, VEC, Holdings and GP desire
to enter into this Agreement in order to confirm and memorialize
such agreements; and
WHEREAS, VEC, Holdings and GP
entered into an Employee Benefits Transition Agreement effective as
of July 1, 2006, and now desire to amend and restate the agreement
as set forth below.
NOW, THEREFORE, the parties hereby
agree as follows:
1.
Definitions
. In
addition to the terms defined elsewhere in this Agreement, the
following terms, when used herein, shall have the following
meanings:
“COBRA” shall mean the
continuation coverage requirements for “group health
plans” under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended from time to time, and as
codified in section 4980B of the Code and sections 601 through 608
of ERISA.
“Code” shall mean the
Internal Revenue Code of 1986, as amended from time to
time.
“Cut-Over Date” for a
particular Eligible GP Employee (other than one who was an employee
of GP as of July 1, 2006), shall mean the date that the Eligible GP
Employee ceases to be a VEC Employee and becomes a employee of
GP.
“DOL” shall mean the
Department of Labor.
“Eligible GP Employees”
shall mean (i) individuals who, as of July 1, 2006, are employees
of GP, as well as any other individuals who are transferred from
VEC or any of its affiliates to GP on or before the effective date
of the Second Tranche, (ii) individuals identified as “fully
dedicated” to providing services to Valero L.P. (such
individuals listed on Schedule B attached hereto), and (iii) such
other individuals who meet the requirements of a Post-Second
Tranche Eligible GP Employee as further described in Paragraph 5
below.
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from
time to time.
“GP Plans” shall mean
each of the employee benefit plans and programs to be adopted and
maintained by GP as contemplated herein.
“IRS” shall mean the
Internal Revenue Service.
“QDRO” shall mean a
domestic relations order which qualifies under section 414(p) of
the Code and section 206(d) of ERISA.
“QMCSO” shall mean a
domestic relations order which qualifies under section 609(a) of
ERISA.
“Second Tranche” shall
mean December 22, 2006, the effective date of the second sale by
VEC of its equity ownership interest in Holdings, at which time VEC
ceased to have any equity ownership interest in
Holdings.
“Services Agreement”
shall mean the Fourth Amended and Restated Services Agreement among
Diamond Shamrock Refining and Marketing Company, Valero Corporate
Services Company, Valero L.P., Valero Logistics Operations, L.P.,
Riverwalk Logistics, L.P. and Valero GP, LLC dated as of December
22, 2006, as may be amended and restated from time to
time.
“VEC Employees” shall
mean all employees of VEC or any of its affiliates other than
Eligible GP Employees.
2.
General Support and
Cooperation . The parties agree, as
a general matter, that they shall fully cooperate with each other
in all reasonable respects in the design, adoption, amendment,
implementation, and administration of the employee benefit plans
and programs, as well as the other matters, contemplated
herein. In furtherance but not in limitation of this general
provision, each party shall provide the other party with such
records, data and information as may be reasonably necessary in
order to carry out the
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intent of this
Agreement. Additionally, VEC shall, at its cost and expense,
assist GP in the design, preparation and initial implementation of
each of the GP Plans, such assistance to include reasonable access
to appropriate individuals within the human resources and legal
functions of VEC. Notwithstanding anything else provided
herein, payment of all costs associated with the design,
preparation and initial implementation of each of the GP Plans
contemplated herein shall be borne by VEC, including but not
limited to related legal and actuarial fees.
3.
No Limitation on Right to Amend
Plans . Notwithstanding any
provision of this Agreement, nothing herein shall be interpreted or
construed to limit the right of either VEC or GP to amend any of
their respective employee benefit plans in whole or in part, or to
terminate any such plan or program, at any time, and nothing herein
is intended to require VEC or GP to continue to maintain any of the
plans or programs described herein. This Agreement is not
intended, and shall not be construed, to constitute an amendment of
any plan or program of VEC or GP, nor shall this Agreement provide
any Eligible GP Employee, VEC Employee, or any other individual any
third party beneficiary rights of any kind.
4.
Term . Each of the
transition services and arrangements provided for herein shall
continue through the earlier of its completion or the Second
Tranche; provided that the parties may agree to extend any of the
services and arrangements beyond the effective date of the Second
Tranche by mutual agreement, and provided further that nothing in
this Agreement shall be deemed to alter or diminish any of the
services provided by affiliates of VEC to GP or any of its
affiliates pursuant to the Services Agreement.
5.
Post-Second Tranche Employee
Transition . The following
provisions address the potential transition of additional employees
from VEC to GP and also specifically apply for purposes of
determining Post- Second Tranche Eligible GP Employees who are
eligible to benefit from the agreements entered into herein with
respect to the transition of employee benefit plans:
(a)
Extension to
and Acceptance of Offers by Indirect and No Service
Employees. Any VEC Employee,
including those that presently provide services indirectly to
Valero L.P. and/or its affiliates (referred to herein as
“Indirect Employees”) and those that presently provide
no services to Valero L.P. and/or its affiliates (referred to
herein as “No Service Employees”) may become employees
of GP and be considered Post-Second Tranche Eligible GP Employees
in accordance with the following provisions:
(i) By March 1, 2007, GP must
provide VEC with a list of Indirect Employees and No Service
Employees to whom it is considering making an offer of
employment.
(ii) By April 1, 2007, GP must
provide VEC with a list of all Indirect Employees and No Service
Employees to whom it has made offers of employment (the “GP
Offer List”). The offers are subject to the following
restrictions:
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1.
Offers for No Service Employees must provide that employment starts
with GP no later than the Last Move Date (as defined in the
Services Agreement) or May 15, 2007, whichever is
later.
2.
Offers for Indirect Employees must provide that employment starts
with GP no later than the relevant Optional Termination Date (as
defined in the Services Agreement) or May 15, 2007, whichever is
later.
(iii) VEC may elect to make
offers to any of the VEC Employees listed on the GP Offer List in
its sole discretion. By April 15, 2007, VEC must provide GP
with a list of all Indirect Employees and No Service Employees to
whom it has made offers of employment.
(iv) GP and VEC may only make
one offer to an employee, which offer cannot be subsequently
modified in any material way.
(v) By May 1, 2007, GP must
provide VEC with a list (the “Final GP List”) of those
Indirect Employees and No Service Employees that have accepted
offers of employment from GP, including the proposed start date
(which may not be any later than the applicable dates identified in
(ii) above).
(b)
Post-Second Tranche Eligible GP
Employees . Only
those Indirect Employees and No Service Employees (i) listed on
both the GP Offer List and the Final GP List or (ii) expressly
agreed upon in a signed writing between VEC and GP no later than
February 28, 2007, will be considered Eligible GP Employees for
purposes of this Agreement (“Post-Second Tranche Eligible GP
Employee”). No other Indirect Employees or No Service
Employees hired by GP will be considered Eligible GP Employees for
purposes of this Agreement.
(c)
Secondment of Certain
Employees . If an
Indirect Employee accepts an offer from GP, VEC will
“second” the Indirect Employee to GP from and after the
earlier of (A) May 15, 2007 or (B) the acceptance by an Indirect
Employee of an offer of employment from GP, until the earlier of
(A) the starting date of employment with GP or the relevant
Optional Termination Date (as defined in the Services
Agreement). The cost to second these Indirect Employees for
this period will be deemed to be included in the Administrative
Service Fee for that particular Service (all as defined in the
Services Agreement).
(d)
Termination of
Employment .
Indirect Employees and No Service Employees that accept offers from
GP, whether or not determined to be a Post-Second Tranche Eligible
GP Employee, will be deemed to have voluntarily resigned from
employment with VEC effective upon his or her starting date of
employment with GP.
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6.
Pension Plan
.
(a)
GP Pension Plan
. GP has adopted a defined
benefit pension plan (“GP Pension Plan”) effective as
of July 1, 2006, to cover Eligible GP Employees, as well as other
individuals subsequently employed by GP and determined to be
eligible under the terms of the GP Pension Plan. The GP
Pension Plan provides all Eligible GP Employees with service credit
for purposes of vesting and eligibility for all service credited by
VEC under the Valero Energy Corporation Pension Plan (“VEC
Pension Plan”) for such purposes. Additionally, Final
Average Salary (as defined in the GP Pension Plan) includes
eligible compensation earned by Eligible GP Employees while covered
under the VEC Pension Plan, as well as eligible compensation earned
with GP after July 1, 2006 or the Cut-Over Date, as
applicable.
(b)
VEC Pension Plan
. Effective as of July 1,
2006, GP shall cease to be a participating employer under the VEC
Pension Plan and all Eligible GP Employees, effective July 1, 2006
or the Cut-Over Date, as applicable, shall no longer be eligible to
accrue additional credited service for purposes of accruing
additional benefits under the VEC Pension Plan. VEC shall amend the
VEC Pension Plan to provide that, for purposes of calculating the
benefits of each Eligible GP Employee, Final Average Salary (as
defined in the VEC Pension Plan) shall include all eligible
compensation earned by the Eligible GP Employee while employed by
GP (or an affiliate of GP provided, and for so long as, such
affiliate maintains a traditional formula-based defined benefit
pension plan) following July 1, 2006 or the Cut-Over Date, as
applicable, and prior to the earlier of the date that the Eligible
GP Employee commences his/her benefit under the VEC Pension Plan,
or separates from service from GP. GP or its affiliate, as
appropriate, shall provide to VEC an affidavit to be certified by
an appropriate representative setting forth the amount of earned
compensation and years of service with the respective entity to be
used in determining Final Average Salary as contemplated in the
preceding sentences. VEC shall amend the VEC Pension Plan further
to provide that vesting service under the VEC Pension Plan shall
include all service with GP following July 1, 2006 or the Cut-Over
Date, as applicable, prior to the date that the Eligible GP
Employee commences his/her benefits under the VEC Pension
Plan.
7.
Retiree Welfare
Benefits . GP has adopted a
retiree welfare benefit plan effective July 1, 2006 that will offer
retiree coverage for medical, dental, prescription drug, vision and
life insurance benefits for eligible retirees of GP, as determined
by GP from time to time, beginning January 1, 2007. The
parties agree that VEC will provide retiree welfare benefits under
the VEC retiree welfare benefit plan, as it may be amended from
time to time, for Eligible GP Employees who: (i) as of July 1,
2006, are at least age fifty-five (55) and have at least five (5)
years of credited service recognized by VEC under the VEC Pension
Plan; or (ii) on or prior to December 31, 2006, are eligible for,
and elect to begin receiving, a pension benefit under the VEC
Pension Plan and, coincident with such pension benefit
commencement, elect to commence retiree welfare plan
coverage.
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8.
Active Employee Welfare
Benefits .
(a)
Welfare Plan Transition
Period . Health and
welfare benefit coverage for Eligible GP Employees, as well as
other individuals subsequently employed by GP and determined to be
eligible under the terms of the applicable welfare plan sponsored
by GP, and their eligible dependents, shall, during the period
beginning July 1, 2006 and ending December 31, 2006, or such other
date to which the parties may agree (“Welfare Plan Transition
Period”), continue to be provided under the VEC welfare
benefit plans, subject to the respective terms of such plans, as
they may be amended from time to time. VEC will also be
responsible for providing any required COBRA coverage for Eligible
GP Employees and dependents whose COBRA qualifying event occurs
during the
